The Emergence of a Digital Economy
Online rental platforms operating in Canada, like Airbnb, do not currently collect or remit GST/HST, pay no corporate income tax to the Canadian government, and make it far too easy for those renting rooms on their platforms to do the same. This puts online rental platforms at an unfair advantage over other accommodation businesses, like hotels, who pay their taxes and play by the rules. And the real loss is felt by Canadians who end up paying more in taxes to cover the cost of our social programs.
What started as true home sharing has expanded into a growing trend: people using these platforms to become commercial operators. This means that multiple units or entire homes are being rented out on a consistent basis. Effectively, these operators are running illegal hotels within existing residential housing.
An Overview of Airbnb in Canada
The Hotel Association of Canada (HAC) conducted the most comprehensive Canada-wide study analyzing the impact and effects of the short-term rental industry in 2017. The results showed that commercial operators are growing exponentially, far outpacing actual home sharing activity. Alarmingly, only 17% of Airbnb’s total revenue in Canada is generated by true home sharing where the owner is present during the guest’s stay. The other approximately 80% comes from hosts renting entire home units where the owner is not present.
Developing a Modern Approach to Short-Term Rentals in A Digital Economy
The short-term rental industry operates with limited regulation and online platforms are being used to operate commercial accommodation businesses, resulting in unintended consequences. Governments at all levels are grappling with the implications of the growing short-term rental industry and platforms like Airbnb.
Based on the clear and immediate need for action, HAC released best practice guidelines for regulating short-term rentals. The paper, “Developing a Modern Approach to Short-Term Rentals in a Digital Economy,” gives Canadian municipalities an analysis of regulatory developments worldwide and best practice approaches to developing a local framework.
The proposed framework outlines regulatory tools that cities can apply, including:
It’s Time for Tax Fairness
The findings of our study have demonstrated that the hotel industry is competing on an uneven playing field. Commercial operators are running exactly the same kind of business as a hotel, but none of the rules and regulations apply to them. This includes taxation, health and safety standards, the requirement to obtain a business license, insurance, safety inspections, and accessibility requirements.
We have made progress in a number of jurisdictions. Watch our video to learn more.
To join our fight, send a letter to your Member of Parliament by visiting FairRules.ca.
As a result of the industry’s strong national presence and united message, we are seeing wins across Canada.
These wins include: